Flash: PBOC in unchartered territory? – Deutsche Bank

FXstreet.com (New York) - According to Macro Strategy Analysts J. Reid and C. Tan at Deutsche Bank, “A previously undisclosed summary of a PBOC internal meeting on June 19, the PBoC was concerned that in the first 10 days of June, Chinese banks increased lending by RMB1 trillion (or $163 billion) – an amount the central bank said had never been seen in history."

And about 70% of that amount consisted of short-term notes that mostly don't show up on banks' balance sheets-making it easier for the banks to get around regulatory lending restrictions. Recent reports out of China suggest, the PBoC responded by reinforcing its message that it wouldn't be easing monetary policy despite slower growth, which ultimately resulted in the rate spikes that we saw towards June end.